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What are the best UK asset classes for 2018?

With the end of 2017 fast approaching, investors in the UK property market should now be looking towards how changes in the nation’s property landscape will affect investment decisions in the coming year, and adjusting their investment outlook for 2018.

As a result, gathering insight into the UK’s for the next 12 months should be a top priority; but it begs the question: where should my focus lie in the months ahead? New research could now provide the answer, and here Experience Invest takes a look at best asset classes for 2018.

Investing in UK Student Housing in 2018

In 2017, UK investment volumes in the student housing market have been forecast to exceed those witnessed last year, with annual growth in the market from £3.2 billion to £4.9 billion. This represents a considerable upturn in investor activities during the last 12 months, and it is a surge in investor appetite that JLL predicts will continue into 2018.

Meanwhile, statistics published by UCAS at the end of Q3 showed a marginal decrease of one per cent in the number of students receiving university places this year. However, the total number of students in need of university accommodation remained in line with the five-year average at approximately 485,000 across the UK.

Looking forward, research from Savills suggests investment in student housing will remain a top priority among investors in 2018. Full-year investment volumes this year are expected to grow by 17 per cent in comparison to 2016, with a total of £5.3 billion being channelled into purpose-built student housing models across the country.

Regional cities, including Liverpool and Newcastle in particular, are now set to become hotspots for investment in purpose-built student accommodation in the coming year, with rising student numbers in each of these cities and growing demand for more top-quality accommodation driving appetites for investment and investor yields.

A strong pipeline of new and existing students in both of these regional cities will help to drive investment throughout the coming year, with a current shortfall in supply for purpose-built student accommodation meaning there is considerable scope for new developments to meet this growing need at present.

Investors could therefore be tempted to move away from the saturated London market and take on new strategies that deliver greater return on investment due to the relatively lower costs of new ventures in regional markets.

For more information about investing in UK Student Accommodation in 2018, download your free guide.

Hotel investment in 2018

The UK remains a highly attractive location for investors in the hotel asset class, with London maintaining its position as one of the strongest markets for hotel investment in the world.

Figures published by JLL reveal investment in the capital reached $57.2 billion (£42.9 billion) this year, placing the city second overall in the research provider’s Top 10 Global Hotel Markets report, behind only New York ($66.5 billion). Investors remain focused on positive returns and improving yields, with the London market providing each of these in abundance.

Meanwhile, according to Deloitte’s European Hotel Investment Survey 2017, the UK’s regional cities continue to provide considerable opportunity for investment both at present and when looking to the months ahead.

Luton in particular could be a hotspot for investors in the coming years, with new plans announced for the expansion of Luton Airport as part of the London Luton Airport Vision for Sustainable Growth 2020-2050 plan. It sets out proposals to increase the capacity of the airport from its current level of 15 million passengers per year to 36 million by the end of the programme period.

With such a dramatic upturn in traveller numbers, the Luton hospitality sector is also forecast to benefit greatly, with a major upturn in hotel demand as visitor numbers skyrocket during the coming years.

Elsewhere, investor demand in Liverpool is also set to flourish in the months ahead, as PwC forecasts an accelerated growth in new room supply across the north-west city in 2018. In total, more than 700 new rooms are expected to be made available to travellers next year, with average growth supply across all regional cities in the UK of more than two per cent.

Overall, investors will continue to benefit from a growth in popularity among travellers from outside the UK, with an associated strengthening of investor appetite expected as a result.

UK Buy-to-Let investments

The UK’s private rental sector (PRS) remains another strong asset class for investors to consider in the coming year, with figures published in Knight Frank’s English Housing Survey showing a 24 per cent rise in the number of 25 to 34-year-olds living in this type of property during the last ten years.

Overall, Census data shows that more than two million households have entered the UK’s PRS in recent years, singling it out as a sector of ongoing growth. Major markets across the country therefore continue to prove an attractive investment option at present, with Knight Frank predicting a positive shift in market sentiment across Greater London and the south-east, as well as in several key regional cities, including Leeds.

Markets including Manchester, Bristol and Birmingham are also forecast to provide a stable platform for growth in the coming year, with average yields currently standing at between four and 4.25 per cent on average.

At the same time, Liverpool continues to attract considerable investor interest at present, with house prices in the north-west city predicted to rise by as much as five per cent in 2018. Figures published by JLL have predicted a marked upturn in house values for the city from 2017 to 2021, with market growth expected to stand at an impressive 22.8 per cent over the five-year period.

Liverpool rental growth is also forecast to be among the highest in the country, with an associated uptick in value of three per cent in 2018 and 17.6 per cent by 2021. Investors could therefore achieve a significant return on investment when moving into the Liverpool property sector in the years ahead.

Finally, figures published by Savills show there remains an acute shortage of homes within the UK PRS market at present, leading to the potential for a further increase in rents of up to 21 per cent across the country over the next five years. This means there’s a real potential to deliver even greater yields and returns on investment for all those expanding their property portfolio into the PRS market in 2018.

For more information about expanding your property portfolio and recommended asset allocation in 2018, contact Experience Invest to discover which asset classes will best suit your investment criteria.

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Whilst Experience Invest has an office in Hong Kong, the company and individuals representing Experience Invest are not licensed to and do not deal with any property situated in Hong Kong. Experience Invest is only authorised to market and to sell properties which are based in the UK.

Whilst Experience Invest has an office in Hong Kong, the company and individuals representing Experience Invest are not licensed to and do not deal with any property situated in Hong Kong. Experience Invest is only authorised to market and to sell properties which are based in the UK.